Choppies on SA roadshow ahead of JSE listing

Correspondent | Monday May 18, 2015 15:33

BDTV :So you are in SA at the moment on a roadshow, what sort of sense are you getting from institutional investors, are they interested in investing in Choppies?

Ramachandran Ottapathu (RO): Thank you…we are getting very positive feedback and it is exciting for the company as well as for me as CEO. Its exciting feedback from the investment communities.

BDTV: Let us take a look at the investment case Choppies is putting on the table and what exactly is getting the investor community excited here. Talk us through some of the growth you have experienced over the past year?

RO: If you take Choppies from the listing on the BSE (Botswana Stock Exchange) in 2012, we had 50-odd stores. Currently we operate 125 stores, that store number doubled in three years and our rollout plan includes up to 200 stores to roll out by 2016 December. With that it speaks for itself…the growth opportunities are there for the investors to come and participate in the growth of the company.

BDTV: So why raise more capital on the JSE, couldn’t you have got more on the Botswana Stock Exchange?

RO: There is the issue of liquidity prevailing in BSE, and this is the best and the most liquid stock exchange on the continent.

BDTV: So it is a liquidity issue really?

RO: For sure and it is our natural progression in the growth pace of the company to come into the JSE.

BDTV: Okay so talk us through more of the natural progression and expansion you are seeing, how are you targeting from here on out where exactly you are going to be setting up shop?

RO: We have got an expansion plan to roll out stores in the existing market. There’s five stores going to be opened in Botswana this year, before the end of the calendar year and 14 in SA and 12 in Zimbabwe and we are rolling out then into new markets like Zambia, Tanzania and Kenya and eventually to Namibia.

BDTV: So you already compete with South African retailers I suppose on your home territory in Botswana, and also I suppose in the north of SA on the routes to Gaborone where there are a number of Choppies supermarkets. What sets you apart, are you confident going head to head with the likes of Shoprite and Pick n Pay on their home turf?

RO: We have been operating against all the South African chains in Botswana from the day we started. We started off with zero market share while they had been operating there for long enough and they had significant market share. Currently we hold 36% of the Botswana market in Choppies and the towns we came into in SA, we have rolled out successful stores and we have been trading reasonably well across the region, all the provinces where we trade in, which is North West, Limpopo and Free State.

BDTV: Of course logistically a lot of reliance on distribution centres and where you have got those set up so talk us through that and how that is limiting or allowing the extension of your footprint.

RO: That is where our key strong points are for growing the company to the 200 store mark, especially in Botswana where we can operate well above 100 stores with the current infrastructure, we do not need to add on anything on top of it. In SA the infrastructure that we put in can take up to 100 stores without any more capital expenditure and in Zimbabwe we can operate up to 50 stores with the current infrastructure in place.

BDTV: Okay so compound annual growth in total revenues up 27% over the past three years…

RO: Past four years.

BDTV: Past four years. Ebitda up 19% over the same period and that puts you on a PE in the low 20s. What is the current year looking like, can you continue the sort of growth that you have seen over the past four years?

RO: We are reasonably confident that we will be able to replicate the same growth levels going forward as well.

BDTV: Okay, well let us leave it there and best of luck to you and we will have you in our studio on listing I am sure.

RO: We are all excited and we are hopeful that the investor community will get a lot of benefit going forward with us.